NITRATES PRESSURE ON LAND RENTS

There is increased pressure on agriculture to become more environmentally sustainable and this is increasingly evident at EU policy level. The Nitrates Action Programme – the means by which the EU Nitrates Directive is delivered in Ireland –has undergone a number of changes, with stronger measures introduced for the protection of water quality.

Changes

A revised methodology to calculate the amount of organic nitrogen (N) generated on farm is being implemented in 2023 to produce a more accurate organic N stocking rate for individual farms. The new methodology will result in an increase in the amount of organic manure deemed to be generated on some farms, relative to the approach previously used. This will have implications for some farms, as each is bound by an organic N stocking rate. The change has particular importance for dairy farms because livestock intensity per hectare tends to be higher compared to other farming enterprises.

For the purposes of the Nitrates Directive, livestock intensity is measured according to the livestock excretion rates for organic N and organic phosphorous (P). The estimation of organic N is based on a series of co-efficients for each livestock type. Until 2023, a common co-efficient was applied. With the introduction of so-called ‘banding’ in 2023, there are now three specific N co-efficients that can be applied to cows depending on milk yield. The implications of this banding are particularly important for the subset of dairy farms in the highest band, i.e., where the average milk yield per cow exceeds 6,500kg (approximately onefifth of specialist dairy farms). In order to maintain current levels of milk production, many of these farms will need to either increase their land area or reduce milk production in the short term.

Implications for the land market

farming is prevalent. This increase is expected, given the very positive recent returns in dairy farming. However, the introduction of the banding policy is also likely to be a factor. The impact of the banding policy on the agricultural land rental market could be highly dependent on farming structures in a locality and the willingness of landowners to lease out additional land. Localities with a high density of dairy farms where milk yields exceed 6,500kg per cow will tend to experience a larger increase in rental prices. Some farmers will be outbid in the local land market, including those with tillage and drystock (beef and sheep) farms. In those situations, the challenge for these farmers may be to hold on to their existing access to rented land. Many medium and longterm land lease contracts are fixed in price until the contract comes to an end. However, the banding policy could eventually impact on the price of these previously arranged leases. In addition, young and new entrant farmers may face even higher land prices in places where there is a high concentration of dairy farms in the highest band.

Loughrey Research Officer, Teagasc

The SCSI/Teagasc Land Market Review & Outlook 2023 points to sharp increases in land rents in Leinster and Munster, where dairy

The full report is available at: www.scsi.ie and www.teagasc.ie/news-events/news.